Plans to develop a "boutique campus" in Malaysia as part of a major new development in the south of the country have been shelved by the University of Hull.
The institution has dropped plans to build a Faculty of Science, Health and Enterprise at the Iskandar Edu City development in the Johor region, which is being set up as part of Malaysia's plan to become a higher education "hub" in South-East Asia.
Despite the setback, Iskandar Investment Board (IIB), which is behind the development, insists that demand remains high among other UK institutions for a spot at the 600-acre complex. The aim is to attract a collection of Western universities that will each set up a single faculty - a similar model to that being pursued at the planned Kuala Lumpur Education City.
Malaysia has a target to get 100,000 overseas students studying in the country, more than double the current number, and sees transnational education provided by universities in the UK, US and Australia as a key factor in achieving its goal.
Khairil Ahmad, senior vice-president of education and healthcare at IIB, said: "Unfortunately, Hull's strategic plans and our strategic plans did not match and we were thus unable to proceed further.
"Other UK universities continue to engage with us and I am pleased to say that interest has not waned at all."
Newcastle University has already secured an agreement to open a medical and biotechnology faculty, while several British public schools are also looking to open branches.
It was expected that Hull would join them, having signing a memorandum of intent with IIB in July 2008, but complications arose when market research suggested that neither an engineering nor health faculty would be financially viable.
Barry Winn, pro vice-chancellor for research and enterprise at Hull, said the recession was not the reason behind the withdrawal.
But he said: "The recession makes you look at issues around student mobility. Can people afford to send their children to an international university?
"I believe IIB felt in the longer term a business school would be better suited in their planned business school quarter, rather than on the Edu City site. We went in without fear or favour and it didn't quite work out."